IMF extends zero interest loans to poor nations

Published December 21, 2012

Reuters

WASHINGTON – Poor countries with loans from the IMF can continue to pay no interest until the end of 2014, the Fund's board said on Friday, as their economies are still recovering from the global economic crisis.

The IMF's zero-interest loan program for low-income countries had been set to expire at the end of this year.

"The executive board decision to keep interest rates at zero ... is testament to the Fund's continued support for low-income countries since the global economic crisis hit in 2009," IMF Managing Director Christine Lagarde said in a statement.

The IMF decided in 2009 to allow countries eligible for its anti-poverty loan program to pay zero interest on loans in light of the financial crisis.

The Fund also set a target to raise $17 billion to lend to the poorest countries, which are threatened by the risk of euro-zone contagion and by a drop-off in foreign aid after the global recession.

IMF's Lagarde has pushed to meet that goal, seeking to ease concerns that the IMF and donor nations may turn a blind eye to the world's poor as they focus on containing the euro zone crisis.

In September, the IMF said it would distribute a $3.8 billion windfall from gold sales to its 188 member countries if they agreed to commit most of the money to the anti-poverty loan program.